July brought largest year-over-year rise in Canadian home prices in six years

Canadian home prices rose in July, and according to real estate data firm Teranet, the increase was driven by hot housing markets in BC and Ontario.

Teranet tracks home prices in Canada using its Teranet-National Bank National Composite House Price Index, and this month’s update shows that the index rose 2 per cent from June to July — that’s the second-largest July increase since the index was started in 1999. The index also saw a sizeable year-over-year uptick of 10.9 per cent, the biggest in six years.

The index measures home price changes by tracking the observed or registered home prices of properties that have been sold at least twice. To increase accuracy, Teranet excludes certain properties from its calculations, such those that members of the same family have sold to one another, and those that have a high turnover rate.

According to Teranet, seven of the 11 markets its index tracks saw month-over-month home price increases last month; what’s more, in four of the seven markets where prices rose, gains were higher than the countrywide increase of 2 per cent. Victoria led the way with a 3.8 per cent gain, and it was followed by Toronto at 3.1 per cent, Hamilton at 2.4 per cent and Vancouver at 2.3 per cent.

Notably, Toronto recorded its 14th rise in home prices in 15 months, while prices have set records for the last five months in Hamilton and for the last three months in Victoria. On a month-over-month basis, just Calgary, Halifax and Quebec City saw home price declines, recording falls of 0.1, 0.4 and 1.6 per cent, respectively.

Year-over-year, Vancouver had the biggest rise in home prices by far at 24.3 per cent. Victoria was next at 14.7 per cent, while Hamilton’s increase came in at 13.4 per cent and Toronto’s was 13.3 per cent. Halifax, Calgary, Edmonton and Quebec City were the only markets where home prices fell compared to last July.

In a note on the updated index, National Bank’s Marc Pinsonneault said that overall he believes it shows that Vancouver is “in a league of its own.” He comments that in addition to recording the largest year-over-year rise in home prices, the city’s monthly price rises have been above 2 per cent for the last six months.

And unlike some market watchers, Pinsonneault doesn’t believe home prices in Vancouver are set to cool. He points out that even though home sales fell in the city last month — possibly due to the new foreign buyers tax — “the Vancouver resale market remains tight.” He adds, “[f]urthermore, the labour market in Vancouver is red hot.” Together, those two factors should continue to support home prices in the city.